John has a budget of $600 to spend on film tickets (X) and on restaurant meals (Y). Each film ticket is priced at $60 (denoted by P_X), whereas the price of a restaurant meal (P_Y) is $30. Her utility function is U(X,Y)=8X+Y, which gives marginal utilities MU_X=4/X and MU_Y=1. Her indifference curves are convex to the origin.

1) Find the equation of John's budget line. Explain how John decides to spend his budget with the aid of a diagram.

2) Find the number of film tickets and restaurant meals Rita purchases.

3) John receives a pay rise and so increases his budget for film tickets and restaurant meals to $660. Find the number of film tickets and restaurant meals John now purchases.

4) For John are theatre tickets and restaurant meals normal goods, inferior goods or not associated with income?

5) Suppose the price of restaurant meals falls. How do you expect John's demand for film tickets to change? Explain with reference to substitution and income effects.